There is a wide range of divergent opinion of what's in the shareholders/partners interests, or what actually constitutes a representative shareholder. There also is limited need for equity financing for a company once it is profitable.
Where there is little doubt is what is required for a company to exist: a customer. Therefore, companies exist to create customers first. A company will exist regardless of what shareholders do - they can hollar/scream/sell their shares/replace the management. A company cannot exist for very long without a customer.
Digging further, most shareholders in practice have abdicated any interest in how the company is actually run to management. Only board members (at times) and activist investors have influence, and the latter's priorities can have mixed results.
Voting structures limit benefits further. In the case of a company like Google, for example, the share structure makes it Larry and Sergey's company - i.e. owned by management - public shareholders basically have zero say. There will be no activists. Larry and Sergey don't act or have goals like typical shareholders. This also goes similarly for Facebook and Mark Zuckerberg, Berkshire Hathaway and Warren Buffett (who has been great for shareholders - but he has all the say), or Echostar and Charlie Ergen.
All of this makes "shareholder value" a nebulous concept. Of course, customers aren't the entire story. They're just Step 1.
Step 0 is that companies exist because we prefer to organize a society for decentralized wealth production and consumption - it's more effective, freer, innovative, etc., than centralized planning and production, or anarchistic free association. But that's a whole other rathole.
So, what does a a company do, again? It's a bunch of people working together to create & retain customers for a profit. How does one describe management's mission in this? Instead of shareholder value maximization, Peter Drucker has suggested that management is all about maximizing the "wealth-producing capacity of the enterprise": “It is this objective that integrates short-term and long-term results and that ties the operational dimensions of business performance—market standing, innovation, productivity and people and their development—with financial needs and financial results. It is also this objective on which all constituencies depend for the satisfaction of their expectations and objectives, whether shareholders, customers or employees.”
There is a wide range of divergent opinion of what's in the shareholders/partners interests, or what actually constitutes a representative shareholder. There also is limited need for equity financing for a company once it is profitable.
Where there is little doubt is what is required for a company to exist: a customer. Therefore, companies exist to create customers first. A company will exist regardless of what shareholders do - they can hollar/scream/sell their shares/replace the management. A company cannot exist for very long without a customer.
Digging further, most shareholders in practice have abdicated any interest in how the company is actually run to management. Only board members (at times) and activist investors have influence, and the latter's priorities can have mixed results.
Voting structures limit benefits further. In the case of a company like Google, for example, the share structure makes it Larry and Sergey's company - i.e. owned by management - public shareholders basically have zero say. There will be no activists. Larry and Sergey don't act or have goals like typical shareholders. This also goes similarly for Facebook and Mark Zuckerberg, Berkshire Hathaway and Warren Buffett (who has been great for shareholders - but he has all the say), or Echostar and Charlie Ergen.
All of this makes "shareholder value" a nebulous concept. Of course, customers aren't the entire story. They're just Step 1.
Step 0 is that companies exist because we prefer to organize a society for decentralized wealth production and consumption - it's more effective, freer, innovative, etc., than centralized planning and production, or anarchistic free association. But that's a whole other rathole.
So, what does a a company do, again? It's a bunch of people working together to create & retain customers for a profit. How does one describe management's mission in this? Instead of shareholder value maximization, Peter Drucker has suggested that management is all about maximizing the "wealth-producing capacity of the enterprise": “It is this objective that integrates short-term and long-term results and that ties the operational dimensions of business performance—market standing, innovation, productivity and people and their development—with financial needs and financial results. It is also this objective on which all constituencies depend for the satisfaction of their expectations and objectives, whether shareholders, customers or employees.”